Archive for December, 2013

A regional anti-money laundering body has called on Caribbean countries to consider implementing counter measures in order to protect their financial systems from the ongoing risks of money laundering and terrorist financing emanating from Belize.

The counter measures, which amount to a financial blacklisting of the jurisdiction, will mean that all financial transactions between T&T and Belize will be placed under much greater scrutiny, and it is possible that wire transfers and other payments would be delayed or denied.

To comment on the impact of the counter measures on trade and payments between T&T and Belize, Republic Bank executive director, Nigel Baptiste, said: “These measures will undoubtedly negatively affect trade and payments between the countries as the enhanced monitoring will result in longer turnaround time, higher costs and possibly the refusal of accepting payments where information requirements are not met.”

The rating withdrawal follows Fitch’s recent withdrawal of the ‘AA-‘ Insurer Financial Strength rating assigned to Steadfast Insurance Company (Steadfast). The rating of the notes was based on credit support from 2 insurance policies underwritten by Steadfast, and therefore connected with the Insurer Financial Strength assigned to Steadfast.

The BSI notes are backed by two restructured government of Belize sovereign obligations from the country’s 2007 debt restructuring and benefit from the aforementioned insurance policies, which cover non-payment by the government of Belize. Since 2012, Steadfast has made three payments to Belize Sovereign Investments under the policies related to partial payments by the government, enabling timely payment of interest on the notes.

The Caribbean Financial Action Task Force (CFATF) has blacklisted Belize jurisdiction as one of the jurisdictions that fails to address deficiencies in the money laundering and offshore banking legislation. CFATF stated that, although Belize has taken some steps in that direction, these were not enough to follow the Anti-money laundering and Combating the Financing of Terrorism recommendations.

The decision of the international organization may have serious consequences for the banking sector of Belize. It threatens the commercial banks, as stated by Prime Minister of Belize Dean Barrow. He said, however, that the country is given six months to improve the situation. The draftsperson, who operates as legal counsel to the Ministry of Finance, has been given the task to produce additional legislation by February 2014, the time of the next meeting of Caribbean Financial Action Task Force. Belize government plans to be compliant by that time.